THE LAST MILE: A LOGISTICAL PERSPECTIVE OF E-COMMERCE
The COVID-19 outbreak has prompted businesses to step-up their online sales and home deliveries. In order to provide an immediate response to the new demand for client deliveries, businesses, restaurants and even small producers have begun to make ‘last-mile’ deliveries through their own means. Home deliveries have certain associated issues that go unnoticed in these times of lockdown:
- More time dedicated to deliveries: deliveries to individual homes in the time of COVID-19 do not bring the problem of not finding the person at home, people who in a normal situation are not always there. However, the lack of tracking systems, given that the traders themselves are the ones delivering the orders, makes it difficult to notify clients with a phone call.
- In urban areas, it may be difficult to make the delivery due to a lack of parking spaces or traffic jams at certain times, among other issues.
- The costs associated with these types of home deliveries are very high. Suppliers must consider whether the purchase also covers the delivery time. The need to sell is often prioritised over the profitability of making deliveries. Either payment for transport or a minimum order is therefore important to ensure that the margins absorb the cost of delivery. In addition, if we add the fact that on many occasions the delivery is not made on the first attempt, this will have an even greater impact on the costs, as the product has to return to the warehouse or will involve more administrative tasks (telephone calls, arranging another delivery time, etc.). Last-mile distribution, especially in the case of B2C, becomes more expensive with the administration and cost of returns; these costs are largely unknown to many businesses.
Consequently, delivery routes need to be designed for each day. There are software programs for this purpose, but they are probably unaffordable for a small business. It is important to combine orders, thinking about integrated logistics depending on the type of product. Integrating orders for the food sector, where the cold chain cannot be broken and refrigerated transport is required, is not the same as doing it for sports clothes or shoes, for example. A small business has to create synergies and work with others in order to create volume and be able to invest in joint, professionalised logistics.
Imagine there are four food stores which make individual deliveries three times a week. That implies four vehicles, which are probably not full and may not optimise the routes with others. In the time of COVID-19, we may not find traffic jams or have problems parking, and we will most likely find the client at home. But in a normalised situation, this option is not sustainable. Collaborative logistics in all areas and surroundings is necessary and will benefit the companies and, above all, the consumers or end clients themselves.
Here is a summary of our recommendations:
- First, combine orders in a delivery point or a logistics point that allows delivery routes to be optimised for more than one business.
- Use small, light and sustainable vehicles, such as electric bikes, bikes with a trailer, electric cars. Minimising the environmental impact is an important point to bear in mind and keep track of.
- Use lockers or delivery points like ‘click and collect’.
- Use route optimisation applications to automatically inform the client of the day and time of their package delivery and to anticipate transit and weather conditions. The use of devices that record the client’s signature helps to track the deliveries.
At Nordlogway we have comprehensive logistics knowledge and advise our clients on various parameters related to the supply chain.